Trustees play an essential role in managing trusts. They can ensure that they handle the deceased person’s assets according to the terms set out in the trust document. Trustees have specific duties and responsibilities, including managing and distributing the trust assets to the beneficiaries.
However, there are circumstances where a trustee might withhold money from a beneficiary. Understanding when and why this might happen can help you in the future.
When can a trustee withhold money?
There are three ways in which a trustee can withhold money.
- Terms of the trust document: If the terms of the trust stipulate certain conditions that must be met before a beneficiary can receive their distribution, the trustee has to enforce these conditions. For example, a trust might require a beneficiary to reach a certain age, graduate from college, etc.
- Beneficiary misconduct: In some cases, the trust document may grant the trustee discretion to withhold distributions if the beneficiary is involved in wrong or illegal behavior. This might include substance abuse, gambling, or other activities.
- Protecting the trust’s interests: A trustee has a fiduciary duty to protect the trust’s assets. If there are outstanding debts or legal claims against the beneficiary, the trustee may withhold distributions to protect the trust from liability.
Legal recourse for beneficiaries
If a beneficiary believes that a trustee unfairly withholds distributions, they have legal options under Arkansas law. Beneficiaries can request a detailed accounting of the trust’s assets and distributions to ensure transparency.
Understanding the terms of the trust and the trustee’s duties is important for both parties to navigate this relationship effectively.